HR Compliance Issues: Everything HR Leaders Should Know

Published On
Jul 7, 2022
Read Time
5 Minutes
OnBlick Inc

In every organization, the HR (Human Resources) department is responsible for managing the employee life cycle and administering employee benefits. HR leaders ensure that a company treats its employees fairly and help the business avoid fines. An appropriate HR compliance program is required to escape costly penalties and lawsuits.

This article discusses the most significant aspects HR leaders should be familiar with to address compliance issues.

What is HR compliance?

Human resource compliance ensures that a company’s policies and practices meet its legal and regulatory requirements. It also certifies that the organization follows all applicable labor laws.

Needless to say, proper resources and procedures are mandatory to keep any business in compliance with the law. This minimizes the risk of errors and guarantees that the company operates efficiently. HR compliance also aids organizations in protecting their reputation and promoting a positive work environment.

HR leaders and compliance

One of the most critical roles of the HR department is bridging the gap between the company’s goals and its compliance practices. There are instances where the company may fall at risk when any policy or strategy they adopt does not align with the legal regulations.

The HR leaders can support the company’s strategy, evaluate and sort the loopholes and mend them. A comprehensive understanding of the company’s goals and strategies can help ensure that decisions are made based on the organization’s best interests without compromising the rules and regulations.

Common Compliance issues and solutions

Today’s HR leaders must focus on and implement an effective compliance plan. An effective strategy is one that clearly defines the organization’s goals and objectives. Such a plan can help them make informed decisions and achieve compliance goals.

1. Issues during hiring

Besides race, color, and religion, recruitment ads should refrain from using language that suggests a preference for a particular candidate based on protected characteristics or information. There are various tools that can help you create an unbiased job description (JD), such as software that can write informative and accurate JDs.

2. Authorized access to documents

Both job candidates and employees expect that their personal information is kept private. To ensure privacy, filled-in applications, I-9 forms, and other critical work-related documents should be stored in a secure location. Make sure that only authorized individuals have access to these documents.

3. Misclassified workers

Misclassifying an employee can lead to penalties and other legal issues. To avoid potential problems, it’s essential that the HR leaders first determine if the employee is an independent contractor or a regular employee.

4. Proper Training and Orientation

New hires should be given an orientation program to understand your company’s culture and policies. A compelling new hire orientation program can ensure you provide them with the best experience possible, thereby improving the retention rate. It can also help minimize your risk of lawsuits. Some experts suggest that it’s a good idea to have the new hires shadow their coworkers for a couple of days so they can learn how to work safely.

5. Inaccurate payroll and tax payments

One of the most critical factors HR leaders should consider when remunerating the employees is timely and correctly calculating their pay. This step can help maintain a positive work environment and avoid wage claims. Having a payroll service can also help automate the process.

6. Policies and processes for leave

It’s often a daunting task for HR managers to approve and allocate adequate leaves to employees. Leave management becomes challenging as it requires the HR department to balance its obligations and maintain a positive work environment. To minimize their liability, ensure the leave administration procedures follow all regulations.

7. Fair pay practices

Even if your organization adheres to the Equal Pay Act and various state laws regarding gender pay inequality, it’s still important to regularly review the employees’ pay to ensure they receive correct wages. This can also include adequate health coverage for the employees. It’s a requirement for companies with more than 50 workers to offer health insurance to their employees. Take the call to provide coverage and avoid penalties under the Affordable Care Act.

8. Workplace conflicts

Although some employees may be dissatisfied with your practices, it’s essential to maintain a cool head and avoid making a big deal out of it. Firing an employee on the spot or reacting to an outburst can put you in a vulnerable position based on wrongful termination lawsuits. HR leaders should consider a regularly monitored feedback system to keep the employees’ concerns at bay.

9. Unpaid final wages

In most states, some laws require employers to pay their employees their final wages on the last day of work. A well-functioning payroll system can help prevent over-payment and ensure that the employees receive the proper pay.

10. Checklist for compliance

A good HR compliance checklist is requisite for organizations to keep track of all their crucial operations at all times. It can also help them identify areas of improvement and ensure that they follow proper procedures.

One of the most critical factors that an organization should consider while implementing its compliance program is completing Form I-9 for its employees. This can also help prove that your hiring practices are not discriminatory.

Summing Up

The HR department is responsible for creating a culture of integrity within an organization. This can be achieved only through continuous effort and regulatory compliance. A well-defined HR compliance program is essential to identify areas of improvement and ensure that the organization follows proper procedures. We hope you take care of the compliance issues listed above and craft a comprehensive HR compliance policy.

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